Gold edges higher on US-China tensions

Bengaluru — Gold steadied on Friday as an escalation in US-China tensions underpinned bullion’s safe-haven appeal, though positive economic data and easing lockdowns in some countries set up the precious metal for a weekly drop.

Spot gold was trading at $1,727.39/oz by 2.48am GMT, having dropped 1.4% on Thursday. US gold futures rose 0.3% to $1,726.50/oz. Bullion had rallied to its highest since October 2012 on Monday, but has since lost ground and is now heading for a 0.8% weekly decline.

“The fundamentals are still supportive for gold. But, there was a slight improvement in the manufacturing activity in Europe and the US, the PMI data last night [Thursday] was slightly better,” said Avtar Sandu, a senior commodities manager at Phillip Futures.

The eurozone economy’s contraction eased in May, the Purchasing Managers’ Index (PMI) survey showed. Germany’s private sector recession also improved on loosening of lockdown curbs that were put in place to prevent the spread of the coronavirus.

However, US-China frictions dampened risk appetite, underpinning bullion and offsetting pressure on the metal’s prices from the slightly better data.

Asian shares fell after Beijing’s plan to impose a new national security legislation on Hong Kong drew a warning from US President Donald Trump.

Gold has held ground above the key $1,700/oz level, building impetus to reach its 2011 peak in the coming quarters, Fitch Solutions said in a note.

The lower-for-longer interest rates with quantitative easing in full swing, macro and geopolitical uncertainty and strong investor flows should continue to support gold prices on a six to 12 month horizon, Fitch added.

Palladium gained 1.2% to $2,037.40/oz, and was looking to post its best week since end-March. Platinum fell 0.6% to $827.62/oz and silver slid 1.5% to $16.81/oz.